Zuffa, Plaintiffs in Antitrust Lawsuit file supplemental briefs

September 17, 2019

On Thursday of last week, the parties in the UFC Antitrust Lawsuit filed supplemental briefing per the court’s invitation.  The filings represent what amounts to the closing salvo in support or opposition of class certification in the lawsuit.

The briefs highlight the expert testimony elicited by the parties through the evidentiary hearings that occurred in late August and mid-September.

In essence, there are four elements to determine class certification.

But, in my opinion, the case for class certification boils down to two things:

  1. Whether Plaintiffs’ methodology of regression is a valid way to determine that there was an anticompetive scheme by Zuffa in which it restrained and/or suppressed fighter earnings through the use of exclusive contracts and shutting down rival promotions.
  2. Whether Zuffa’s business practices were in fact anticompetitive. As Zuffa asserts, they may be dominant in the relevant market, but that doesn’t mean it violates antitrust laws.

 

Supplemental Brief – Plaint… by Jason Cruz on Scribd

Supplement Brief – Zuffa by Jason Cruz on Scribd

Plaintiffs highlight their briefing by maintaining the antitrust theory that Zuffa’s monopsony power in the relevant input market for MMA Fighter Services through acquisitions, exclusive contracts and coercion was an anticompetitive scheme which shut down rivals and impaired the market for fighter services.  As a result, this reduced fighter pay below competitive levels.  Additionally, Zuffa’s tactics as alleged by Plaintiffs harmed competition for promoting live MMA events “because by shuttering rivals and locking-up a must-have input (i.e., fighters), it was the only place for “major league” MMA.”

The four threshold elements in proving the need for a certification of a class action lawsuit are typicality, commonality, numerosity and adequacy.

Here, Plaintiffs argue that despite Zuffa’s claim that coercion to re-sign with the promotion by individual fighters give rise to individual claims due to the fact specific nature of each does not give special significance to the fighters’ claim.  Plaintiffs assert that it is the overall effect of Zuffa’s scheme is common of all potential class members. They argue that the commonality of class member claims is based on Dr. Singer’s ‘standard impact regression model’ which assessed pay for each Class member.  Second, Plaintiffs showed Zuffa maintained a pay structure, “such that any general suppression of Fighter compensation it achieved through its Scheme would have had a widespread effect across the Class.”  Plaintiffs argue that it’s the commonality threshold of the class action elements that Zuffa has issues.

As for the ‘wage share’ versus ‘wage level’ debate which has been the forefront of the battle of the experts, Plaintiffs claim that they only need to show that ‘wage share’ is a “plausible or reliable method and that it is common.”

They also include argument in support of Dr. Singer’s methodology of Foreclosure Share which measures the percentage of Fighters subject to Zuffa’s Exclusive Contracts in his relevant markets and submarkets.  The most notable criticism by Zuffa was the alleged weighting of the share of a relevant market based on assessing Zuffa and non-Zuffa fighter pools in the Foreclosure Share analysis.  But Plaintiffs cite the fact that Dr. Topel conceded that better ranked fighters generate more revenues and thus are more valuable to a promotion than other fighters and weighting is necessary.  Also, they cite to case law which states that weighting is standard in antitrust economics.

Plaintiffs claim that Dr. Topel offered ‘an entirely new argument at the hearing,’ citing that Dr. Singer’s variables in his impact regression undermined his results.

Finally, Plaintiffs defended Dr. Zimbalist’s “yardstick method” when assessing damages in his expert report.  As you may recall, Dr. Zimbalist’s expert report was criticized by Zuffa for its use of team sports leagues such as the NFL, NBA, NHL as well as Top Rank Boxing when assessing the level of damages available to Plaintiffs.

Conversely, defendants argue that if there was a purported monopsony, it was a legal monopsony.  Zuffa argued that Dr. Toepel’s rebuttal to Dr. Singer’s regression method was that a “regression measuring an effect on fighter share could not distinguish a competitive market from one with competitive restraints because a rise in revenue in either would decrease fighter share.”  Therefore, Dr. Singer’s methodology and conclusion regarding foreclosure share is rendered useless according to Dr. Toepel.  Zuffa argued that its expert Roger Blair confirmed Dr. Toepel’s conclusion citing that in a competitive market you can get “two very different wage shares or revenue shares.”

The thrust of Zuffa’s argument was that it was its business acumen and its achievement in a competitive market drove revenue for the company.  It paid fighters more than its competitors and that is why the labor supply remained robust.  They argue that even if Plaintiffs disagree, the regressions do not prove whether an effect on wage share resulted from a legal monopsony of the purported anticompetitive scheme the fighters claim.

Additionally, to disprove Dr. Singer’s report, Zuffa identifies articles within it that are contrary to what Singer purported claims.  Zuffa also suggests that Dr. Singer’s “foreclosure share” misinterprets the law.  They point to a section where Singer explains why he selected 30-month contracts as his method of foreclosure.  He cites case law but there is no case law to be found in that portion of Singer’s report. according to Zuffa.  Maybe more telling is a journal relied upon by Dr. Singer that Zuffa has learned is a fraudulent academic journal.  Zuffa states that it has named itself similar to a reliable academic journal to purportedly cause confusion.

Payout Perspective:

As one might expect, we see to differing ways of approaching the final briefing.  Plaintiffs must prove that its theory of regression is valid and Zuffa’s scheme was anticompetitive.  Throughout the first week of evidentiary hearings, it appeared as though Plaintiffs did well in proving this.  However, Zuffa did well in undermining the findings of Dr. Singer’s report by allegedly disproving his theory.  MMA Payout will keep you posted.

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